Southern States Fire & Cas. Ins. Co. v. Whatley

• Decision Date: 18 May 1911
• Citation: 173 Ala. 101,55 So. 620
• Parties: SOUTHERN STATES FIRE & CASUALTY INS. CO. v. WHATLEY.
• Court: Alabama Supreme Court

55 So. 620

173 Ala. 101

SOUTHERN STATES FIRE & CASUALTY INS. CO. v. WHATLEY.

Supreme Court of Alabama

May 18, 1911

Appeal from Chancery Court, Jefferson County; A. H. Benners Chancellor.

Bill by R. L. Whatley against the Southern States Fire & Casualty Insurance Company. From a decree overruling a demurrer to the bill, respondent appeals. Affirmed.

The case made by the bill is that an agent of the respondent approached the complainant for the purpose of selling him stock in the respondent company, and in order to induce complainant to purchase he represented, first, that the certificate which was issued to him would show on its face that the stock was $25 per share; second, that the respondent had already declared a dividend of 25 per cent. upon its stock, which would be divided between them, and that if the complainant bought stock then he would participate in a division of the dividend; and, third, that Adam Glass, a prominent citizen and business man of Mobile, had already purchased stock in said corporation in the amount of $1,250 that, relying on these representations, he was induced to and did purchase 55 shares of stock, for which he executed his two promissory notes, for the sum of $520 and $910 respectively, and that the said notes were discounted by said Cozart to the Bank of Wilmer, and that the amount was placed to the credit of the Southern States Fire & Casualty Insurance Company. It is alleged that the representations were untrue when made, and are still untrue, and that they were fraudulently made for the purpose of inducing the purchase, and that as soon as complainants discovered the falsity of said representation, and before he received his certificates of stock he offered to rescind said contract and the respondents declined and failed, and also refused to deliver him his notes or a sum of money equal thereto. It is then alleged that the stock was forwarded the Bank of Wilmer, but that complainant refused to receive it, and so notified the bank, with the request that they notify respondent. The demurrers raise the point that there is not equity in the bill, nor offer by the complainant to do equity; plain, adequate, and complete remedy at law; and because the bill shows on its face that said notes are not in possession or under the control of defendant, but have passed into the hands of the purchaser for value, and that this court is therefore without the power or jurisdiction to decree the cancellation thereof or to return them.

Lamkin & Watts, for appellant.

Gordon & Eddington and Paul A. Savage, for appellee.

ANDERSON J.

The bill seeks to avoid the contract of subscription to stock and the cancellation of notes executed for the purchase of same and sets up that complainant was fraudulently induced to subscribe for said stock and execute said notes, by the false and fraudulent misrepresentation of material facts. A court of equity will entertain jurisdiction to cancel a fraudulent contract, at the instance of the injured party, notwithstanding he may sue at law upon the covenants of warranty or for deceit. Perry v. Boyd, 126 Ala. 162, 28 So. 711, 85 Am. St. Rep. 17; Cullum v. Bank, 4 Ala. 21, 37 Am. Dec. 725; ...